Posted on 11/26/2022 2:32:48 PM PST by TigerClaws
The IRS on Tuesday shared tips for the upcoming tax season — including a reminder about the new $600 threshold for receiving Form 1099-K for third-party payments.
The change applies to payments from third-party networks, such as Venmo or PayPal, for transactions such as part-time work, side jobs or selling goods, according to the IRS.
Before 2022, the federal Form 1099-K reporting threshold was for taxpayers with more than 200 transactions worth an aggregate above $20,000. However, Congress slashed the limit as part of the American Rescue Plan Act of 2021, and a single transaction over $600 may now trigger the form.
More from Personal Finance: Biden administration extends payment pause on student loan debt 'The stakes are high.' Why there's a push to expand the child tax credit in 2022 Here's how to score a charitable tax break on Giving Tuesday
Aimed at closing the tax gap — a top priority of the Biden administration — the provision is estimated to bring in $8.4 billion from fiscal year 2021 to 2031, according to the Joint Committee on Taxation.
"It's going to be a new form for a lot of people," said Adam Markowitz, an enrolled agent and vice president at Howard L Markowitz PA, CPA in Windermere, Florida. "And the worst thing they can do is ignore it." Who may receive Form 1099-K for 2022
Companies file Form 1099-K, known as an "information return," annually to report credit card and third-party payments, with a copy going to taxpayers and the IRS.
Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, said the business income on your return must include what's reported on Form 1099-K. Otherwise, you may trigger an automatic IRS notice or even an audit, he said. The challenge with the new lower threshold amount of $600 for Form 1099-K is that personal payments and reimbursements could be incorrectly reported as taxable transactions. Justin Miller national director of wealth planning at Evercore Wealth Management
It's possible you'll receive Form 1099-K for transactions you don't expect, such as reselling Taylor Swift tickets at a profit, for example, warned Justin Miller, national director of wealth planning at Evercore Wealth Management in San Francisco.
But selling items at a loss, such as used furniture, may be less clear.
"Obviously, if you sell a $2,000 couch for $1,000, there's not taxable transaction there," Markowitz said. "You don't get a capital loss for it, and you don't have a gain." What happens if you get a 1099-K by mistake
Although the change aims to collect taxes on income, not personal transactions, experts say it's possible some filers may receive Form 1099-K by mistake.
"The challenge with the new lower threshold amount of $600 for Form 1099-K is that personal payments and reimbursements could be incorrectly reported as taxable transactions," Miller said.
A frequently asked questions page from the IRS says you shouldn't receive Form 1099-K for personal transfers, such as reimbursements for splitting meals, gifts or allowances.
However, if you receive the form for personal transactions, the agency says to contact the issuer for a correction. If the company doesn't fix the error, you can attach an explanation to your tax return while reporting your income correctly, the IRS says.
Use cash.
You can only use the reward money you earn on the items they offer on their website, for example, a $25 dollar Amazon gift card will cost you $75 in reward money, and that specific card can only be claimed every 90 days.
Dynata, LLC used an online company called 1099tax.com to write to the people who do the surveys, and provide them with a link to fill out the required W-9 form.
I don't trust anyone, and refused to fill out the form online. 1099tax.com replied, and gave me a phone number for Dynata, LLC that wasn't a working number. I wrote them back and they suggested I write Dynata, but of course they never provided the email address, so I contacted e-Rewards support. They responded quickly, told me I could print the form myself, and provided the snail mail address for Dynata LLC, and the specific person and department to send the completed form to. I still have no idea if the form was received. I guess I'll just have to wait to see if I received over $600 in reward money and reward redemption for 2022.
The one thing that irks me is that e-Rewards only provides you with a 90-day listing of the surveys you took and the money you received during those 90 days. You can't see your total for the whole year, so that if you get a 1099 to file with your taxes, you have no idea if it's factual or not, because you have nothing to match it against. If I do happen to get a 1099 this year from them, I will contact Dynata again, and demand a complete breakdown of every penny I earned, what survey it was connected to, and each reward redemption and value that I received.
More like an individual (not a business) selling a few old items they don’t need anymore for less than what they paid new. Hope everyone saved their original receipts.
“Holy crap. They’re actually doing it.”
Yep…good and hard.
Fedgov actually has record breaking tax receipts. I guess we need to pay more to keep the proxy war going…..
Since you exchanged items for money, that money is not income as defined when the 16th Amendment was allegedly passed. They are even exchanges, so there is no income.
On that basis, there is no reason to report it.
This is why they are trying, and will, eliminate the Physical Dollar.
Everything fedzilla does and will do can be stopped if the people wanted.
the people don’t care.
Considering you have to do that to file Fed taxes(minus C corp), I fail to see the problem.
however, what you’re referring too, is just signing up for a list for the IRS gestapo to rail.
As I read this, it appears you could pay someone $599.00
monthly and still remain under the $600.00 limit.
Is this accumulative over the period of a year?
It doesn’t seem to indicate that.
I have someone I pay $3,000.00 per year. I only pay $250.00
a month, but I don’t want to trigger higher taxes for them.
Anyone disagree with my first three paragraphs?
ping
And there an army of 86,000 new auditors to make everyone’s life hell.
Simply stop paying or getting paid utilizing payment services. Idiotic if one is working a side gig.
Use ca$h...that is until they issue digital USD and stop circulating currency notes.
So are they going to spy on everybody’s garage sales to squeeze every penny they can get?
Send your enemies some 1099 for fun
>>Good luck on them getting compliance on this petty garbage<<
Don’t use payment services.
Not enough information. However, 1099K is for Payment Card and Third Party Network transactions. Not for payments made by individuals.
I would recommend reading the IRS link About Form 1099-MISC
You don't have a problem. You may have a business. The government definition starts with gross receipts over $600.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.